Shareholder Groups Seek to Limit Corporate Contributions

Shareholder Groups Seek to Limit Corporate Contributions

Article excerpt

Shareholder groups aim to keep a lid on companies' political
spending in the wake of Citizens United v. the Federal Election
Commission, a case in which the Supreme Court eased restrictions on
corporate campaign spending.

In late February, an obscure real estate company in Jacksonville,
Texas, placed ads in two newspapers calling on local Republicans not
to support the incumbent state representative in the GOP primary.

The ads didn't work. The incumbent won handily. But they played
on the worst fears of some liberal groups. In the wake of a Supreme
Court ruling easing limits on political spending, will corporate
money flood into political campaigns?

Shareholder groups and others are rushing to make sure it
doesn't. Handed down in January, the court's decision came too late
for most shareholder activists to file resolutions for corporate
annual meetings this spring. So some of them are turning to uncommon
methods to keep a lid on corporate political donations.

"We're thinking beyond our usual tool of shareholder resolution
filing, [exploring] what else might be effective," says Laura Berry,
executive director of the Interfaith Center on Corporate
Responsibility (ICCR) in New York. "The filing tool is a good one.
But it's insufficient to the magnitude of the problem [of corporate
political spending] this year. And the timing doesn't help."

In its January ruling in Citizens United v. the Federal Election
Commission, the Supreme Court allowed corporations, and, by
extension, unions and advocacy groups, to tap their treasuries to
support or attack candidates for federal office - although they
still can't directly contribute to these candidates. "We're
horrified. It was a dreadful ruling that has all kinds of pernicious
implications," says Ms. Berry.

So shareholders are fighting back. For example:

- In late February, the Center for Political Accountability (CPA)
and the Council of Institutional Investors jointly sent letters to
427 of the companies in the S&P 500 stock index, asking them to
disclose all their political contributions. The letters, signed by
44 other groups, also asked corporate boards to approve and review
all company political outlays. As of now, 73 companies in the S&P
500, including almost half of those in the S&P 100 index, disclose
their political spending, says Bruce Freed, the CPA's president.

- The Investor as Owner subcommittee of the Securities and
Exchange Commission is taking up the issue of political
contributions. "We will be [exploring] whether investors have a
consensus view [on] what, if any, steps the SEC should take,"
especially as concerns disclosure, says Stephen Davis, chairman of
the subcommittee and executive director of Yale University's Mill-
stein Center for Corporate Gov-ernance and Per-for-mance in New
Haven, Conn.